If regulators wanted further proof of need for additionalpipeline capacity to the Northeast, Independence Pipeline andTranscontinental Gas Pipe Line said they got it last month whendelivered prices in some markets shot up to nearly $20 per Dth.(See NGI, Jan. 24) Citing the January deliverability problem, thetwo pipelines separately asked FERC to deny the requests for a stayof the interim order conditionally approving their Northeastprojects.

Both Independence and Transco, the sponsor of the MarketLinkexpansion, assailed Texas Eastern Transmission, which sought tostay their Northeast pipeline projects because it contends it hasor will have enough turned-back capacity on its system to lease tocustomers of the projects. Tetco insists this surplus capacitywould moot the need for construction of the greenfield Independenceline and most of the MarketLink expansion [CP97-315, CP98-540].

If that’s so, Transco wanted to know why in January Tetcoimposed operational flow order (OFO) “restrictions on firm serviceinto the same rate zone (Zone M3)” where the turned-back capacityon its system “purportedly” exists.

“If Texas Eastern currently has 300,000 Dths per day ofavailable firm capacity…..why with a surplus of capacity are theyhaving to limit the remaining firm shippers?”

During the cold-spell in January, Transco said it — unlikeTetco — restricted only non-firm forward haul transportation.”This may be another reason that shippers in a competitive marketmay choose the Independence/MarketLink project over Texas Eastern’slease alternative,” Transco told FERC.

The tight Northeast capacity market in January underscored apoint that Transco said it has been trying to drive home for awhile— even though Tetco is receiving notices of turned-back capacityon its system, the “overwhelming evidence” suggests this doesn’tmean demand has totally disappeared. Rather, it signals that thecapacity is merely shifting hands – “other parties will step up anduse this capacity to serve existing demand for natural gas,”Transco noted.

Tetco wasn’t the only Northeast pipeline affected last month.”Algonquin Gas Transmission Co. issued a critical warning for adelivery rate restriction; Tennessee Gas Pipeline Co. sealed andrestricted utilization of the northern part of its system becausenominations exceeded capacity; [and] Transco restricted non-firmforward haul transportation on the northern part of itssystem…..These restrictions occurred even though temperatures,while colder than normal, [were] still well above record lows,”Independence said.

The shortage of Northeast pipe capacity was further reflected inthe delivered prices in mid to late January. For example, deliveredprices on Tennessee Gas in Zone 6 jumped to as high as $17/Dth fromabout $2.60.

Susan Parker

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